Expect more upside in L&T, Reliance: Tulsian

SP Tulsian of sptulsian.com says that the hike in urea price was over due. If the urea price is increased then the subsidy burden of the government will also reduce. He also says both traders and investors can buy Orchid at Rs 120 levels. At the current price, Reliance has potential for some upward movement. 

Below is the edited transcript of his interview. Also watch the accompanying video.

Q: What is your view on fertiliser after news of 10% hike in urea prices?

A: The hike in urea price was over due. The last time urea price was increased from Rs 4800 to Rs 5300. If the urea price is increased then the subsidy burden of the government will also reduce.

Q: After 5% move in L&T stock where do you expect the stock to go?

A: Yesterday, I indicated that this stock can go up by Rs 125 and the stock has already risen by Rs 60-65 and there is still room for about Rs 60 rise. Profit booking can be expected at Rs 1,290-Rs 1,300 levels.

Q: What is your view on Orchid?

A: I don’t the stock can fall below Rs 120. The results have been very bad as a result valuations have got factored into the price. Both investors and traders can enter in this stock at Rs 120 levels.

Q: Currently, what is your view on Reliance?

A: With the buyback scheme on, I did not expect Reliance share to fall below Rs 700. The board of Reliance had approved a buyback of 12 crore shares, but till now the company has only bought 1.2 crore shares.

Lack of aggressive buyback at this stage is making the situation more confusing. It looks like whether the buyback was announced just to support the share price or there was genuine intention of the company to increase the value by extinguishing part of the shares, which could be bought back by the company. This stock looks to have reached it support and should move up from hereon.

Q: What about Gammon India and Gammon Infra, the subsidiary of Gammon India that reported a loss earlier on?

A: Gammon India figure does not look impressive. The forex gain on the balance sheet is just an adjustment entry. If the Rs 30-crore forex gain is knocked off the company is left with a PAT of Rs 27-28 crore, which is quite bad in spite of a 10% increase in the top line to close to about Rs 1870-1880 crore.

This kind of trend has been visible for all the engineering, procurement and construction (EPC) contractors or maybe all contracting companies, as seen in case of IVRCL as well.